CAS Exam 5 Fall 2017, Question 19
Study guide: Exam 5
Given the following information as of December 31, 2016:
Cumulative Reported Claims ($000) as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 10,000 | 15,000 | 18,000 | 19,800 |
| 2014 | 11,000 | 16,500 | 19,800 | |
| 2015 | 12,650 | 18,975 | ||
| 2016 | 14,500 |
Cumulative Paid Claims ($000) as of (months)
| Accident Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 4,000 | 10,000 | 15,000 | 18,000 |
| 2014 | 4,400 | 11,000 | 16,000 | |
| 2015 | 4,840 | 12,100 | ||
| 2016 | 5,324 |
Reported Claims Development Technique Ultimate Claims ($000)
| Accident Year | Ultimate Claims ($000) |
|---|---|
| 2013 | 20,790 |
| 2014 | 22,869 |
Part a (1 point)
Calculate the ultimate claims for accident years 2015 and 2016 as of December 31, 2016, using the reported claims development technique.
Part b (0.5 points)
Produce a diagnostic that shows an operational change in the insurer's history. Briefly describe a scenario that could result in the observed diagnostic.
Part c (0.75 points)
Briefly describe an issue that could arise for each of the following parties that relies on accurate unpaid claims estimates if unpaid claims are understated by the insurer.
i. Investors
ii. Regulators
iii. Internal management
Answer this question and see the worked solution
Concepts tested
- Chain Ladder Method
- Tail Factor
- Case Adequacy
- Reserve Adequacy
- Data Diagnostic Analysis
- Unpaid Claims